Mixed messages (KOR)

Jan 11,2019

The key topic in President Moon Jae-in’s New Year’s press conference on Thursday was the economy. Nearly half of his prepared speech was devoted to our sagging economy. That could reflect a determination to focus on the ever-worsening economic conditions to find a breakthrough. Moon underscored a need to create new values through innovation to help sustain growth.

Moon chose the right emphasis. But the economy is more than a goal for the future: it’s also a current reality. If his administration pursues ideology-based policies, it could lead to a worse-case scenario. Moon said he regretted our plunging jobless rates, which fell way short of public expectations. “Jobs are the starting point for the lives of the people. I will do my best to raise the quality and quantity of jobs,” he stressed. According to Statistics Korea, the number of unemployed hit 1.07 million last year — the largest since 2000 — not to mention a jobless rate of 3.8 percent, which was the highest in 17 years.

Moon also vowed to reinforce measures to help small merchants, the self-employed and mom-and-pop shop owners who suffered the most in the slump. That could be a positive sign for the economy. But the problem is Moon’s adherence to the conviction that his government is going in the right direction. The government “will make the public feel the fruits of economic policy,” he said. At the same time, he pledged to stick to his untested policy experiment of “income-led growth.” “Economic policy shifts can be a scary thing, but that’s the way to go,” he highlighted.

We still think he’s turning a blind eye to the very cause of our economic hardships: the government’s rapid minimum wage hikes. It was also the government that dismissed the significance of future-growth strategy to the extent that opponents criticized it for lacking any industrial policy at all.

What Moon called “innovative growth” can hardly be achieved by rhetoric. His administration must first encourage enterprises to invest in new technologies, particularly amid unstable economic conditions at home and abroad. The key is deregulation and changing its pro-union policy. A plethora of companies are having trouble running their businesses due to regulations and combative labor unions, which demand compensation for their support of the liberal administration in the last presidential election. On the campaign trail, Moon said that voters repeatedly complained about gloomy prospects for the economy. We urge him to reflect on what he said two years ago.